Combine milk, 1/2 cup of the water, and the butter in a small saucepan and heat until butter melts. Set aside to cool.

Sprinkle the yeast over remaining water in a small bowl.Set aside to proof and soften. Place 1 3/4 cups of the flour, the sugar and salt in a large bowl.

Using an electric mixer, gradually add the liquids to the dry ingredients and beat 2 minutes at medium speed, scraping the sides of the bowl occasionally. Add cheese, egg and 3/4 cup flour, or enough to make a thick batter.

Beat on high speed for 2 minutes, again scraping bowl occasionally. Gradually stir in just enough of the remaining flour to make a stiff batter so it leaves the sides of the bowl. Cover with a damp cloth and let rise in a warm place until doubled in bulk, about 1 hour.

Adjust rack in the lower third of oven; preheat ot 375°F. Using a wooden spoon, stir the raised batter down until it is almost its original volume. Beat for 1 minute.

Spoon batter into 2 deep, well-greased, round, 1 quart casseroles. Bake 40-50 minutes, or until golden. Cool 5 minutes, then remove from casseroles and cool, rounded sides up, on wire racks.

Per slice of Bread: Calories: 105, Protein: 4 g, Carbohydrate: 15 g, Fat: 3 g, Saturated Fat: 2 g, Cholesterol: 15 mg, Sodium: 245 mg.